September is traditionally the worst month of the year for Wall Street – but this year could be different.
August has come to a close hailing the end of summer for those in the Northern hemisphere, and investors are revising and adjusting their portfolios as we move into the most critical time of the year to lock in gains.
February and September are both historically bad months for stock markets, but September is usually worse.
There are different suggestions as to why this is the case. For instance, some insist it is because investors are selling-off to secure come capital for the year; some say it’s down to funds paying out, encouraging selling for tax reasons.
However, this year might be different.
Stock markets had an unusally rough fist half of the year and much of the major disruption has already taken place and future jolts priced-in.
In addition, we expect higher than usual institutional investor activity – supporting prices – due to the current lower valuations. They’re thinking ahead to what is going to happen, not what already has happened.
Individual investors should be taking advantage, too, in the same way.
There are some important long-term opportunities right now with high upside potential and low-risk possibilities. But you must buy wisely in this current volatile environment.
You should bear in mind that long-term and short-duration assets respond differently to rising inflation and interest rates.
As ever, certain sectors will do better than others in the coming months. These include energy, financials, health care and pharma.
Despite my generally bullish sentiment of the so-called ‘September Effect,’ there’s also a warning.
There are many headwinds ahead for the rest of this year that could impact investor returns.
One of the biggest – and most overlooked – is the rising risk of large-scale social unrest.
The global cost of living crisis is the major contributing factor. When people can’t feed their families, get to work or take their kids to school due to high fuel prices, or heat their homes, it’s an almost inevitable recipe for large-scale civil unrest.
Investors should ignore the noise about The September Effect and focus on fundamentals.
London-born Nigel Green is founder and CEO of deVere Group. Following in his father’s footstep, he entered the financial services industry as a young adult. After working in the sector for 15 years in London, he subsequently spent several years operating within the international space, before launching deVere in 2002 with a single office in Hong Kong. Today, deVere is one of the world’s largest independent financial advisory organizations, doing business in 100 countries and with more than $12bn under advisement. It specializes global financial solutions to international, local mass affluent, and high-net-worth clients. In early 2017, it was announced that deVere would launch its own private bank. In addition, deVere also confirmed it has received its own investment banking license.
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